Rental income reporting

Forum|Forum|1 year ago
January 29, 2025
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Where do I report rental income after my parents died and an LLC was created but properties still in parents name. Both parents died in September 2024 within 14 days of each other. Both had wills and the probate hearing has not yet happened. The LLC was created to eventually protect heirs personal money. A Business bank account for the LLC was opened in 2024. I do not having access to parents bank accounts, so rental income is being deposited into the LLC bank account until the eventual opening of an Estate bank account for each parent. Am I correct that the rental income, after date of death, will be reported on an estate Federal Income Tax return instead of passing through to the owners of the LLC and being reported on their respective FIT returns? I do not believe that the rental income passes through to any owners until after the properties are owned by the LLC.

Not A Product Question

DianeW777

Yes, you need to file a Form 1041 for the estate from the date of death to the end of the year. Any income received after death will go on the estate return. Any income prior to death will be reported on the decedent's tax return.

It appears based on your information the income from the estate is being paid to the LLC. If the LLC owns the income then the 1041-K1 will flow to the LLC. Discuss this with your legal advisor to determine whether the LLC or the beneficiaries own the income.

The LLC must be filed since it was opened showing the income or expense for 2024. Depending on the type of LLC, the net income would then go to the shareholders or partners.